Located west of the Pearl River estuary in Guangdong Province, 40 nautical miles west of Hong Kong, Macao's 23.5 sq km of territory comprises the Macao Peninsula, Taipa Island and Coloane Island and is inhabited by about 450,000 people. Macao has been a part of Chinese territory since ancient times. When Emperor Qin Shi Huang unified China in the third century B.C., Macao was formally included in China's territory and became a part of Fanyu County, Nanhai Prefecture; later it was included in Xiangshan County (today's Zhongshan City). In 1553, the Portuguese bribed local government officials in Guangdong to gain permission to drop anchor in Macao's harbor and engage in trade. In 1557, the Portuguese began to settle nearby. In the period following the Opium War of 1840, taking advantage of the weakness of the Qing government, the Portuguese successively seized Taipa and Coloane islands to the south of the Macao Peninsula. In 1887, the Portuguese government forced the Qing government to sign the "Draft Agreement of the Sino-Portuguese Meeting" and subsequently the "Sino-Portuguese Treaty of Peking," providing that "Portugal will administer Macao and subordinate areas in perpetuity, as any other region governed by Portugal." Since then, Portugal has occupied Macao.

The Chinese people have never recognized those unequal treaties. The government of the PRC has repeatedly stated the facts that Macao has always been a part of Chinese territory, and that the Macao issue is a question left over by history. China has consistently maintained that at the appropriate time a peaceful, negotiated solution to this problem inherited from the past should be found. When diplomatic relations were established between China and Portugal in 1979, the Portuguese government recognized Macao as Chinese territory, and the two sides agreed that the question of Macao should be solved through bilateral negotiations in due time. Between June 1986 and March 1987, delegations from the two governments held four rounds of talks. Finally, on April 13, 1987, the "Joint Declaration on the Question of Macao by the

Governments of the People's Republic of China and the Republic of Portugal" was formally signed in Beijing. The Joint Declaration includes the formulation: "The Government of the People's Republic of China will resume sovereignty over Macao effective December 20, 1999." On December 20, 1999, the Chinese and Portuguese governments held a hand-over ceremony as scheduled, marking the resumption of sovereignty by China over Macao. At the same time, the Macao Special Administrative Region (MSAR) was formally established, and the Basic Law of the Macao Special Administrative Region, adopted in March 1993 at the First Session of the Eighth National People's Congress, came into effect.

When the MSAR is officially founded, the Chinese government will carry out the basic policies of "one country, two systems," "administration of Macao by the Macao people" and "a high degree of autonomy" in Macao. The MSAR shall enjoy a high degree of autonomy, and its political, economic, cultural and educational systems shall be similar to those of the HKSAR. The Chief Excutive of the MSAR is HO Hau-Wah.